18 October 2012

German Chancellor Merkel: "We will move forward in Europe"

In her government statement at the European Council meeting, Chancellor Angela Merkel declared herself convinced that Europe would move forward. The problems that caused the euro crisis cannot be solved overnight though, she said. Quality must take precedence over speed.

Strengthening the euro is a longer-term process, but the contours of a union for stability are already clear to see said the Chancellor. She reminded her audience that major progress has already been made with the European Stability Mechanism, the fiscal compact and the Compact for Growth and Jobs. 11 states have also agreed to introduce a financial market transaction tax.

Further developing the economic and currency union

More will have to be done, however, to resolve the crisis in the eurozone, said the Chancellor. That is why, in June, the heads of state and government of the European Union mandated Herman Van Rompuy, President of the Council of the European Union, to draw up new proposals.

Germany for efficient supervision of the banking sector

Integrated financial market policy calls for a more efficient supervision of the banking sector throughout the EU. Germany will be working with enthusiasm to put in place a system of this sort. Quality must be given precedence over speed, however, declared Angela Merkel. She pointed to the complex problems that must be solved. The European Central Bank, which is to be responsible for supervising the banking sector, must also comment officially on the proposal.

The Chancellor believes that integrated fiscal policy will require the European institutions to be strengthened. Much has already been done with the fiscal compact. She assumes that the treaty will come into force at the start of 2013. That is not in itself enough, however.

Angela Merkel proposed giving the EU "genuine rights of intervention" vis-à-vis national budgets. To make this possible, national parliaments would have to enter into pertinent agreements with the European Union. She once again rejected the notion of shared liability for sovereign debts. It would make no economic sense to go down that path, she said.

Stepping up the coordination of economic policy

Europe is only just starting to coordinate its economic policy, said the Chancellor. Coordination touches on core issues of national sovereignty, such as fiscal policy and labour market policy. Solutions must be found for these highly sensitive issues. A balance must be found between the EU’s rights to intervene and the scope for action open to member states.

This will obviously require the authorisation of national parliaments. Specific project-related financial incentives could be put in place to encourage Member States to put into practice agreements reached on reforms. A fund, for instance, could be financed from the revenue raised by introducing the financial market transaction tax. This would be a "new element of solidarity".

Greater democratic legitimation and control

Strengthening the European level within the economic and currency union must go hand in hand with a strengthening of democratic legitimation and control, stressed the Chancellor. To this end, the rights of the European Parliament must be strengthened. We will have to discuss how to achieve this in detail, but basically every decision must be legitimated and controlled at the level at which it is taken, declared the Chancellor.

Decisions in December

The European Council meeting on 18 and 19 October will not make any decisions. It will serve merely to identify the questions to be dealt with by the December meeting. The Chancellor was confident that the heads of state and government would manage to make progress on all open issues on the basis of their shared convictions.

Press release

© The Press and Information Office of the Federal Government